The common signs of a Ponzi scheme

On behalf of Damon Cheronis of Law Offices of Damon M. Cheronis posted in White Collar Crime on Monday, February 13, 2017.

Illinois residents who are looking to invest may want to avoid any opportunities that may sound too good to be true. Those who are offered investments with high returns and little risk may be giving their money to a person or entity running a Ponzi scheme. Typically, investments such as government bonds that have low risk tend to have lower overall returns.

To help investors avoid a Ponzi scheme, the SEC advises that they check to see if an investment is registered. If it is not, it may be a sign to look at other investment opportunities. The same may be true if the person or entity overseeing the investment is not registered with the SEC. Investors should receive regular statements that are easy to read and factually accurate. Anyone receiving inaccurate financial statements or having other paperwork issues may want to ask about those issues.

If the reasoning behind the investment seems complicated or less than transparent, it may be a sign to look elsewhere. It is usually a bad idea to trust anyone who says that returns are generated through a secret strategy. Those who promise consistent returns year after year may also be running a Ponzi scheme. Typically, the market tends to go up or down in a chaotic as opposed to a smooth manner.

Individuals who are facing allegations of running a fraudulent investment scheme may want to retain legal counsel. Penalties for engaging in such a scheme could include jail time as well as restitution. An attorney may be able to argue that an individual did not intend to defraud investors or was ordered by a superior to do so. This may be enough to allow an individual to obtain a plea or acquittal in his or her case.

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